S2NRI

Most of the non-residents live with deep pockets. But, they don’t want to keep all eggs in one basket. It implies that they don’t want to invest their pan hard earned money in an equity or asset.

So, what should they do?

Should they keep that money in a bag for the lifetime?

Absolutely no, not at all!

One idea can help them multiply their money value. Let’s say, they invest in one of the fast developing areas or best place in Chennai or Tamil Nadu, they would get rental income as a capital gain monthly. It’s a viable investment in the property. Yes! It can let the non-residents live off through rental income. Or later, its selling value can make them a millionaire. But before jumping for joy, they must bear in mind these facts:

An act of guidelines called FEMA (Foreign Exchange Management Act) under the purview of Reserve Bank of India (RBI) was constituted in 1999 to look into all matters of NRI property & its management. It has set up a few rules to make the property management as easy as a walkover.

What FEMA suggests as mandatory requirements for NRIs to invest in the real estate?  

1. The investor should be categorized clearly on the basis of his/her period of stay in India. He/she can be any PIO or OCI as well. But both these categories comprise the identical category namely non-residents.
2. Those who like to be an owner of a piece of land/property, they must have an Indian passport. Meanwhile, they don’t need to take permission from the RBI for investing, transferring, disposing or inheriting the property as a gift.
3. If the non-resident wants the property for the residential purpose, he/she can transfer, acquire, dispose of or inherit it. The payment mode, in such case, should be non-repatriation based. The owner must inform the RBI regarding it within 90 days of the purchase.
4. The immigrant Indian can buy one or many property but that must be immovable residential or commercial property. The property can be any plot, pre-launched property, ready to launch property or any under-construction property.
5. They are not allowed to invest/acquire in a piece of an agricultural land/farm house/plantation land. But if he/she has purchased such kind of property before joining the non-resident diaspora, he/she can sell. But the buyer must be an Indian citizen living in India.
6. If he/she is gifted any immovable property, he/she can inherit/transfer/gift it to the resident Indian.
7. The residents of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan are strictly prohibited to buy any Indian piece of land unless they get the permission of the RBI.

Which documents are required for a land purchase in India?

1. PAN card (Permanent Account Number)
2. Valid Indian passport
3. OCI/PIO card
4. Address proof
5. Passport sized photographs
6. Notarized power of attorney from the India consular service
7. Employment contract
8. Salary certificate
9. Valid visa
10. Work permit
11. Work experience certificate
12. Statement of NRO/NRE a/c

Things to know for NRIs to pay for the land purchase:

1. He/she can pay the remitted funds via regular banking channels or NRE/NRO or FCNR a/c. Traveller cheque or foreign currency is strictly ‘no’ for the land purchase in India.
2. He/she can take a loan to get the financial support as per the guidelines of the FEMA regulations. Do bear in mind that banks reject fresh grant of the loan or renew the existing loan if it’s more than INR 100 lakh against the FCNR and NRE deposits.
3. The loan will be available up to 80 percent of the total property cost. He/she must have the documents that are mentioned from 7 to 12 (in the aforesaid documents requirement) for owing fund as the loan. He/she must pay at least 20 percent of the total value of the land. For the payment of the loan amount, he/she shall pay the principal amount with the interest.
4. The repayment of that loan can be made through inward remittance. He/she can use any regular banking channel (NRO/NRE/FCNR) or rental income or relative’s a/c to pay the loan.
5. The non-resident can borrow funds (loan) for the renovation or managing the property that already exists in his/her name. Many housing finance companies offer this scheme for property management in Chennai, Mumbai, Kanpur, Delhi and other metro cities. It payment mode and procedure would be similar to the home loan (as foretold in the 4^th tip).
6. If he/she borrows the loan amount from the employer based in India, it would be permitted provided it is used for the purchase of the property in India. The lender would send the amount into the NEO a/c. For its repayment, the loan papers must read the repayment shall be done through the remittance from the account outside India. The fund shall be credited to his/her NRE/NRO/FCNR a/c. No other payment mode shall be valid.